Faic Business Consultancy JLT

Email: info@faicdubai.com

UAE Company Registration

The difference between a Free Zone company and a local company in UAE:

The registration of a local UAE company is suitable for business operation in the local market and outside of UAE Free Zone territories. Typically, these companies are doing business with retailers and service providers in the retail sector, as well as for contracts with governmental entities.

Legal requirements and conditions for the registration of a company in the UAE domestic market are:
1. At least 51% of the shares and 20% of the annual profits of the company must be owned by an UAE national. (This legal requirement does not apply to free zone companies where 100% foreign ownership is allowed).
2. A license from the relevant public authority.

Limitations:
Companies with specific activities can only be registered and obtain a license in the UAE domestic market, outside the Free Zone. These include: real estate, insurance companies, banks, travel agencies, beauty salons, rental car agencies and workshops, and many others.

Differences:
Company incorporated in a UAE free zones may carry on business only within the free-zone or other countries, and cannot directly sell to the UAE domestic market. Company incorporated in the UAE free zones are suitable for entities not planning to provide their goods or trading activities on the UAE local market. Services and consultancy activities are allowed to operate within UAE free zone and local market as well. However, a free zone company can select an agent/distributor for the UAE local market.

UAE free zones registration benefits:

- Maximum protection of business ownership

- 100% foreign ownership
- Opportunity to penetrate the local market through an agent / distributor
- 100% of annual profits redistribution
- Freedom to conduct activities in other countries
- Capacity to operate within the free zone for tierce activities. In most of the free-zones are presnt restaurants, cafes, supermarkets, and beauty salons, successfully doing business in the retail sector.

Types of license in UAE:
1. Commercial licenses
2. Professional licenses
3. Branches and representative offices in UAE

Types of companies in UAE

1. Local companies, operating in the UAE local market, outside the free zone, are designated "Limited Liability Company", which can be found at the end of the company name «LLC». The capital is shared between the sponsor(s) (UAE national or companies having minimum 51% of the shares) and a Foreign citizen or company to whom cannot belongs more than 49% of the shares.

Most of the companies after the registration are signing an agreement with the founder (UAE national), stipulating that the sponsor is not going to be involved in the company affairs and management, and will not be interested on the profit, at the condition that an annual fixed fee is paid to him. Moreover the role of the sponsor is to manage plublic relations towards state agencies and authorities. For example, obtention and cancellation of visas and other permits. All application will be decided only by the founder of the sponsored company. The major role in this kind of companies belongs to the UAE sponsor because of the above mentioned conditions.

2. The second type consist of companies created to provide services related to specific activities and operating on the domestic market, outside the free zones. For example such companies concern law firms, auditing and consulting agencies. This type of companies registration requires specific and identified education level for employment, this is true from the founders to the employees. Proof of an adequate graduation/diplomas is required; and in some cases to pass an exam. 100% foreign ownership is possible at time of registration, but an UAE national / entity for this kind of company, will be in charge to deal with governmental agencies and authorities, acting as a PRO agent. It should be also noticed that opening of specialized business, requiring authorities approval, with 100% foreign ownership is possible inside the Free Zone:

-       opening an University inside Dubai Knowledge village

-       Opening an Hospital inside Dubai Healthcare city.

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Faic Dubai, Unit № 605-4, BB1 Tower, Level 6 - Mazaya Business Avenue, Diamond Business Center DMCC ("DBC"), Jumeirah Lakes Towers, Dubai, UAE

Mail: info@faicdubai.com